Baxter Denies Israeli Sale Was To Please Arabs

May 02, 1990|By Steven Morris.

Baxter International Inc. on Tuesday denied charges that it sold a plant in Israel in order to gain entry to Arab countries.

The charge was made by Richard Fuisz, former head of a Baxter subsidiary that did business in the Mideast. U.S. law forbids companies to cooperate with the Arab boycott of Israel by refusing to do business in Israel.

Fuisz charges that Baxter had itself removed from the Arab blacklist last year by selling a plant it had established in Israel in 1971.

Last month, Fuisz sent to Baxter`s board of directors copies of a 20-page memorandum that he says was obtained from Arab League files in Damascus. The document suggests that the plant sale and the removal of Baxter from a list of companies prohibited from doing business in Arab countries were connected.

Fuisz founded Medcom Inc., a developer of medical training films that Baxter bought in 1982 for $52 million.

The company did substantial business in the Mideast, but the business fell off after Baxter`s purchase.

Fuisz was demoted from the post of chief executive that year. A suit for wrongful termination was settled for $80,000.

Fuisz says he spent $35,000 last year to have an agent go to Damascus to obtain the Arab League document. Ten thousand dollars went to pay a boycott office employee to allow the document to be copied, he said.

The charges have kindled interest in the sale among Jewish leaders.

The document ``raises some serious questions, if (it) is authentic and accurate in its assertions,`` said Jess N. Hordes, Washington director of the Anti-Defamation League of B`Nai B`rith.

Hordes on April 6 sent a copy of the memorandum to Vernon R. Loucks, Baxter chairman and chief executive officer.

He received a reply last week from G. Marshall Abbey, Baxter`s senior vice president and general counsel.

``I do not know whether the document which you attached is authentic,``

Abbey wrote. ``I do know it is factually inaccurate.``

Sale of the plant ``was unrelated to the Arab boycott and took place after approximately eight years of attempts to find an appropriate buyer,``

Abbey said.

``The Office of Anti-boycott Compliance (of the U.S. Department of Commerce) had previously determined that the sale was not inconsistent with the anti-boycott law,`` Abbey wrote.

At Fuisz`s request, Abbey said, a committee of Baxter`s board is conducting an ``independent review of the issues raised by the document.``

Baxter has received a call from the Securities and Exchange Commission

``asking that we review the facts with them,`` Les Jacobson, a Baxter spokesman, said Tuesday.

Said Jacobson: ``This comes from a disgruntled ex-employee who admits that he bribed Syrian officials to get this document. Nobody has any idea that it`s what it purports to be.``

Baxter had received clearance to sell the plant as early as 1980 after contacting the Commerce Department, he said. A department spokesman Tuesday refused to confirm or deny whether the department is looking into the matter. The plant had about 200 employees and made intravenous and dialysis solutions and other equipment.

The plant, the only Baxter facility in the Mideast, was sold in January 1988 to Teva Pharmaceutical Industries Ltd., an Israeli company, for less than $20 million. Baxter continues to distribute products through Teva, Jacobson said.

Baxter learned in January 1989 that it had been removed from the Arab blacklist, he said.

The company believes that the delisting came about because of Baxter`s efforts, beginning in 1986, to establish a joint venture in Syria. An agreement was reached recently for Baxter to build an intravenous fluids plant.